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Brazil shipping agents warn clients drought disrupting corn shipping on barges

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Brazil shipping agents warn clients drought disrupting corn shipping on barges
© Reuters.

By Ana Mano

SAO PAULO (Reuters) – A severe drought is disrupting barge traffic on the Tapajos river in the Amazon (NASDAQ:) rainforest, shipping agencies told clients this week as Brazil enters the final months of 2023’s corn export season.

“Due to the dry season in the Amazon River, the current situation of barges’ navigation at the Tapajos River is getting restricted,” shipping agent Alphamar said in a note to clients, seen by Reuters. The barge convoys are smaller than usual and in some cases barges are reducing their loads by about 50% in order to safely navigate on some parts of the Tapajos, it added.

Cargonave, another agent, told clients the vessel MV Bravery, which was supposed to anchor at Santarem port to load corn in Para state, was affected.

“The improbability of loading due to lack of logistics to supply the ship is something real and relevant,” Cargonave wrote.

According to Cargonave data, the MV Bravery was shown as due to arrive at Santarem on Oct 10. It will now berth on Oct. 25, when it is due to take almost 56,000 metric tons of corn to Iran.

Cargonave said the draft of private ports on the banks of the Tapajos river is at the lowest levels ever.

Amport, a group representing Amazonian private port operators including Cargill and Louis Dreyfus Company, said barge convoys are reducing their loads by 50% on the Madeira river and 40% on the Tapajos, respectively.

Reducing loads is normal during the dry season but by a smaller proportion, Amport said.

The Madeira river’s mouth region remains 70 cm (27.56 inches) above levels reached during a historical drought in 2010, while the Tapajos is 25 cm (9.84 inches) above its 2010 minimums, Amport said.

Barge operator Hidrovias do Brasil acknowledged “a critical and rapidly changing scenario.” But the company reiterated its barges are running with about two-thirds of capacity on the Tapajos, which is enough to ensure navigability at this time.

The main seaports receiving grain cargos from inland rivers are Itacoatiara, Santarem and Barcarena, and they are operating normally, Amport said.

Despite the effects of the drought, Amport still projects moving around 25% more vegetable bulk in 2023 than in 2022 through Brazilian Amazonian river and seaports.

 

 

Commodities

Oil set for weekly loss on surplus fears despite OPEC+ cut extensions

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By Enes Tunagur

(Reuters) -Oil prices fell on Friday as analysts continued to forecast a supply surplus in 2025 despite the OPEC+ decision to postpone planned supply increases and extend deep output cuts to the end of 2026.

futures were down 66 cents, or 0.9%, to $71.43 per barrel at 1128 GMT. U.S. West Texas Intermediate crude futures were down 65 cents, or 1%, to $67.65 per barrel.

For the week, Brent was on track to fall 2%, while WTI was on course for a 0.5% drop.

The Organization of the Petroleum Exporting Countries and its allies on Thursday pushed back the start of oil output rises by three months until April and extended the full unwinding of cuts by a year until the end of 2026.

The group, known as OPEC+ and responsible for about half of the world’s oil output, was planning to start unwinding cuts from October 2024, but a slowdown in global demand – especially in China – and rising output elsewhere have forced it to postpone the plan several times.

“The outcome of the latest meeting of OPEC+ members surprised us positively … The extension of the production cuts shows the group remains united and is still targeting to keep the oil market in balance,” UBS analyst Giovanni Staunovo said.

Pressuring prices on Friday, analysts reiterated expectations of a supply surplus next year, although some of them now view a smaller surplus than before.

Bank of America forecasts increasing oil surpluses to drive Brent to average $65 a barrel in 2025, while expecting oil demand growth to rebound to 1 million barrels per day (bpd) next year, the bank said in a note on Friday.

HSBC, meanwhile, now expects a smaller oil market surplus of 0.2 million bpd, from 0.5 million bpd previously, it said in a note.

© Reuters. FILE PHOTO: Crude oil tanker Otis delivers crude oil for Dangote Refinery in Lagos, Nigeria December 9, 2023. REUTERS/Seun Sanni/File Photo

Brent has largely stayed in a tight range of $70-75 per barrel in the past month, as investors weighed weak demand signals in China and heightened geopolitical risk in the Middle East.

“The general narrative is that the market is stuck in its rather narrow range. While immediate developments might push it out of this range on the upside briefly, the medium-term view remains rather pessimistic,” PVM analyst Tamas Varga said.

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Oil pares some gains after source says OPEC+ to delay output hike

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By Paul Carsten

LONDON (Reuters) -Oil prices pared some gains on Thursday after a source told Reuters OPEC+ has agreed to delay a planned oil output hike until April 2025.

was up 24 cents, or 0.3%, to $72.55 a barrel at 1237 GMT. It had been at $72.84 before Reuters reported the delay.

U.S. West Texas Intermediate (WTI) rose 25 cents, 0.4%, and was trading at $68.79 a barrel.

The planned delay comes as OPEC+, made up the Organization of the Petroleum Exporting Countries plus allies including Russia, tries to support prices as it wrestles with weak demand, notably from China, and rising supply outside the producer group.

“It will not make next year’s oil balance tight and supply surplus is still anticipated,” said Tamas Varga of oil broker PVM. “This view was mirrored in the gut price reaction.”

There remains the question of how long the delays could last, with this only the latest in a series. OPEC+ was originally due to begin raising output in October as part of a plan to gradually unwind the group’s most recent layer of output curbs of 2.2 million barrels per day.

“They reiterate that these barrels will indeed come back,” said Bjarne Schieldrop, chief commodities analyst at SEB. “It’s a limited time frame. This means there is no upside to the oil price in the next couple of years.”

Elsewhere, a larger-than-expected draw in stockpiles last week also provided some support to prices.

© Reuters. FILE PHOTO: An oil pump is seen operating in the Permian Basin near Midland, Texas, U.S. on May 3, 2017. Picture taken May 3, 2017. REUTERS/Ernest Scheyder/File Photo

In the Middle East, Israel said on Tuesday it would return to war with Hezbollah if their truce collapses and its attacks would go deeper into Lebanon and target the state itself.

Meanwhile, Donald Trump’s Middle East envoy has travelled to Qatar and Israel to kick-start the U.S. President-elect’s diplomatic push to help reach a Gaza ceasefire and hostage release deal before he takes office on Jan. 20, a source briefed on the talks told Reuters.

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OPEC+ likely to extend oil output cuts to support market- report

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On Thursday, OPEC+ is expected to postpone its planned increase in oil production, which was initially scheduled to commence in January, Reuters reported.

The decision to maintain current output levels aims to provide additional support for the oil market. The group, responsible for about half of the world’s oil supply, had intended to start easing output restrictions through 2025 but is now reconsidering in light of a global demand slowdown and increased production from non-member countries.

The consortium’s plan to unwind output cuts has faced challenges due to these market conditions, which have also exerted downward pressure on oil prices.

Accordingly, an extension of the current output cuts for an additional three months is the most probable outcome of the online meeting. However, there are indications that an even longer extension could be under consideration.

The deliberations within OPEC+ reflect the group’s ongoing efforts to balance oil supply with fluctuating global demand. The decision to delay the increase in output is seen as a measure to stabilize the market, which has been affected by various economic factors.

Market participants are closely monitoring the developments from OPEC+’s meeting, as the group’s decisions have significant implications for global oil supply and pricing. The final outcome of the meeting, including the length of the extension, will be determined by the consensus of the member countries.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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